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not receive the settlement amount at issue on account of personal
physical injuries or physical sickness. Petitioners disagree.
We turn to the parties’ dispute regarding whether the
settlement amount at issue was received on account of personal
physical injuries or physical sickness. That is because our
findings and conclusions with respect to that dispute resolve the
issue presented to us under section 104(a)(2).
Where damages are received pursuant to a settlement agree-
ment, such as is the case here, the nature of the claim that was
the actual basis for settlement controls whether such damages are
excludable under section 104(a)(2). United States v. Burke,
supra at 237. The determination of the nature of the claim is
factual. Robinson v. Commissioner, 102 T.C. 116, 126 (1994),
affd. in part, revd. in part, and remanded on another issue 70
F.3d 34 (5th Cir. 1995); Seay v. Commissioner, 58 T.C. 32, 37
(1972). Where there is a settlement agreement, that determina-
tion is usually made by reference to it. See Knuckles v. Commis-
sioner, 349 F.2d 610, 613 (10th Cir. 1965), affg. T.C. Memo.
1964-33; Robinson v. Commissioner, supra. If the settlement
agreement lacks express language stating what the settlement
amount was paid to settle, the intent of the payor is critical to
that determination. Knuckles v. Commissioner, supra; see also
Agar v. Commissioner, 290 F.2d 283, 284 (2d Cir. 1961), affg. per
curiam T.C. Memo. 1960-21. Although the belief of the payee is
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